1. Anek Belbase and Geoffrey T. Sanzenbacher Center for Retirement Research at Boston College 17 th Annual Meeting of the Retirement Research Consortium Washington, DC August 6, 2015 Does Age-Related Decline in Ability Correspond with Retirement Age?

2. 1 Introduction Are some occupations more vulnerable to age-related decline in ability than others? o Often assumed to be “blue-collar” occupations. o But this may be too simple – many white-collar occupations use abilities known to decline early. This project constructs a “Susceptibility Index,” a continuum identifying occupations reliant on abilities that decline early.

3. 2 Age-related decline and occupation Different systems of the body decline at different rates with age. o But some blue-collar occupations can rely on abilities that are preserved (e.g. static strength and crystalized intelligence). o And some white-collar occupations can rely on abilities that decline (e.g. problem solving, memory, and response speed). Broad categories can ignore important variation in the ability to do certain jobs with age.

4. 3 Hypotheses Workers in occupations that rely heavily on abilities susceptible to age-related decline will be more likely to retire early. o This trend will be true regardless of the occupation’s classification as blue or white collar. Using the Index will provide researchers and policymakers insight on non-blue-collar occupations where working longer is difficult.

5. 4 Constructing the Index Step 1: Identify abilities used in occupations The project relies on O*Net data, which surveys job-holders, analysts, and experts to measure the importance of abilities in jobs. O*Net provides data on 51 physical, cognitive, and sensory abilities for over 900 occupations. Each ability is rated on an importance scale from 0 (not important) to 5 (very important).

6. Step 2: Identifying which abilities decline 5 The project relies on literature from gerontology, psychology, medicine, and occupational studies. Abilities assumed to decline early were those identified in the literature to decline significantly by mid-60s, except: o Abilities that could be corrected through devices (e.g., eyesight); and o Abilities that were likely to be maintained through work (e.g., stamina).

7. Example: Assignment of physical abilities 6 AbilityShows early decline Physical strength abilities Static strengthNo Explosive strengthYes Dynamic strengthYes Trunk strengthNo Endurance StaminaNo Flexibility, balance, and coordination Extent flexibilityYes Dynamic flexibilityYes Gross Body coordinationYes Gross body equilibriumYes

8. 7 Step 3: Calculating the Index The numerator is the summed importance (measured on a scale from 0-5) of all the abilities that decline. The denominator is the summed importance of every ability that the occupation uses. The Index represents the share of abilities that decline early, weighted by their importance. o For interpretation, the Index is converted to a percentile rank.

9. 8 Blue collar occupations have high Index values…but so do some white collar jobs. Source: Authors’ calculations from the O*Net and authors’ review of literature.

10. White collar occupations with high Index values have earlier retirements. 9 Source: Authors’ calculations from the Health and Retirement Study 1992-2012 waves and O*Net. Share Retiring Before 65 White-Collar Occupations with 30 or More Workers

11. 10 Using the Index: a model of early retirement The sample consists of all individuals in the Health and Retirement Study (HRS) working at the interview closest to their 58 th birthday. The dependent variable is either: 1) retirement before 62, 2) retirement before 65, or 3) retirement before 67. o Individuals who don’t reach the indicated age prior to the end of the HRS are excluded from the sample. o A total of 5,058 individuals are included.

12. 11 Independent variables include: o The Susceptibility Index percentile for the individual’s age 58 occupation; o Demographic characteristics like race, education, and gender; o “Shock” variables like changes in health, the loss of the age-58 job, or a spouse’s retirement. o Positive coefficients on the independent variable mean individuals with the indicated characteristic were more likely to retire early. Using the Index: a model of early retirement (cont’d)

13. 12 The HRS sample and the Susceptibility Index Variable Bottom 50% of Index (least susceptible) Top 50% of Index (most susceptible) Retired by 6564.9%70.4% Retired by 6780.385.4 Female60.840.4 High school graduate34.244.2 College graduate58.622.7 Black10.721.0 Hispanic4.610.8 Married77.475.4 Current earnings$49,752$35,019 Observations2,5112,547 Source: Authors’ calculations from the Health and Retirement Study 1992-2012 waves.

14. 13 Even controlling for other factors, the Index has a significant effect on retirement timing. Note: Solid bars are significant to the 5-percent level. Source: Authors’ calculations from the Health and Retirement Survey 1992-2012 waves. Marginal Effect of Susceptibility Index Decile on Early Retirement

15. 14 More on regression results A worker in the 90 th percentile of the Index is 8 percentage points more likely to retire by 65 than one in the 10 th percentile. When a dummy variable indicating blue-collar status for the occupation is included in the regression it is insignificant. o The blue-collar versus white-collar distinction does not provide information beyond that provided by the Index.

16. 15 Policy implications Workers in age-susceptible occupations retire earlier than workers in less susceptible occupations. o Includes a variety of white-collar occupations. o Some blue collar occupations are worse than others. As the full-retirement age increases, policymakers should be aware of occupations susceptible to age-related decline. o This awareness may require looking beyond traditional occupational metrics.